1. Technical Field
The invention relates to managing accounts payable and/or accounts receivable auditing data. More particularly, the invention relates to OCR enabled management of accounts payable and/or accounts receivable auditing data.
2. Description of the Background Art
The practice of performing recovery audits originated in the early 1970's, during a time of increased commerce for the retail industry. A growing network of national chain stores led to a rise in competition for retail shelf space from different suppliers. Large companies had a difficult time keeping track of the many different vendor price points, rebates, and other various discounts.
Keeping track of such details was not an integral part of purchasing departments. Such oversights led to a substantial amount of lost revenue going unnoticed in the form of duplicate payments, overpayments, missed shipments, unused credits, and other transactional errors between a company and its suppliers.
Accounts Payable Audit
Today, in a typical accounts payable (NP) audit, auditors work with the NP records of a company in an attempt to find potentially profitable discrepancies in a vendor transaction file for the company or individual business units of the company. Although much of an A/P audit can be performed at a third party location, the NP audit generally requires the cooperation and time of individuals within the client-organization to work in conjunction with the auditors. The A/P audit is a useful tool but can be time consuming for the client, However, typical A/P auditing firms are unable to do a thorough job of reviewing vendor data.
Statement Audit
Another type of audit emerging within the auditing industry is a statement audit (SA). An SA is initiated from the vendors' records and, thus, requires little, if any, intrusion within the client-company. Once vendor files are secured, the auditing company begins the process of searching for gaps, differences, and discrepancies that result in the client-company losing revenue.
An SA deals directly with suppliers and vendors. However, if performed properly, an SA yields findings that an NP audit could miss. Because of the unique nature of an SA, the SA can either stand alone or function alongside typical NP recovery efforts.
An SA is very labor intensive because the SA audit requires the requesting, receiving, organizing, and following up with vendors on auditing data from many sources. In some statement audits, the number of sources ranges in the tens of thousands of sources. Due to the labor intensive demands of an SA, very few NP auditing firms in the NP auditing industry, if any, have the capability of doing a thorough and complete job for their clients.
Prior art statement audits fail to manage credits based on line item data or on a line item basis. Instead, prior art statement audits attempt to manage credits based only on statement level data, which is not as detailed as line item data. Prior art statement audits typically only deal with open line items. Prior art statement audits put each open line item in a file and then record a note for each open line item indicating that the open line item should be checked at some point in the future. In addition, prior art statement audits only keep track of claims. Prior art statement audits fail to keep track of every line item of a client, e.g. both Debits and Credits.
Transactional Errors
There is no accepted way to predict the success of an audit. However, a general rule of thumb is that transactional errors occur with a frequency of about 1/10 of 1%. That translates to a million dollars of annual recovery for every billion dollars of a company's annual revenue.
The A/P auditing industry is growing in size and stature as third party NP auditing firms attempt to recover lost profits for their clients. However, since NP auditing firms are unable to do a thorough job of reviewing vendor data, clients have employed internal auditors in order to recover lost profits via a statement audit. However, clients typically are unable to perform statement audits because they do not have the amount of staff necessary to perform a statement audit. Therefore, a method and system of managing accounts payable auditing data is needed.
Managing Accounts Payable Auditing Data
U.S. patent application Ser. No. 10/349,727, filed Jan. 22, 2003, and incorporated herein in its entirety by this reference thereto, discloses a method and system of managing accounts payable auditing data, where the auditing data includes at least one line item and is ordered by a propensity to yield claims. The method and system, in an exemplary embodiment, includes (1) displaying at least one aged line item, (2) identifying credit data among the at least one displayed aged line item, and (3) recording the identified credit data. In an exemplary embodiment, the aged line item is a line item that has aged for N months, where N is positive integer. In an exemplary embodiment, N is 4.
The displaying includes (a) prompting if there are any line items that are aged line items that have to be validated and deducted, (b) displaying the number of vendors, by rank, that have and have not responded and a status assigned to those vendors, and (c) allowing for the noting and aging for follow up of when the vendor promises a fax, a callback, a mailing of an item, or a check request and when a client puts a claim on hold.
The recording includes (a) allowing for the entry of contact data for at least one vendor, (b) allowing for entry of information about a vendor statement associated with the vendor, (c) allowing for selection of information about credits/claims, credits, or claims of the vendor, (d) allowing for the interaction with the information about the credits/claims, the credits, or the clams of the vendor, and (e) allowing for the entry of comments about the recording.
The statement recovery auditing disclosed in U.S. patent application Ser. No. 10/349,727 is based on a process of collecting a high volume of data that is located on hard copy documentation. This documentation resides in the accounting records of various audit system suppliers or audit system clients' customers. For purposes of simplification of explanation, but not of limitation, the discussion herein focuses on how the process works, for any one client and any one supplier.
Collecting this documentation poses a number of challenges. For example, it is preferred to get fresh documentation from each supplier at least four times a year. If the client has 15,000 suppliers, then it is necessary to request, receive, and review as many as 60,000 documents. In addition to the large amount of documentation involved, also challenging is the fact that each supplier may have different formats in which they deliver the information. Lastly, the suppliers typically do not have any electronic medium for providing the documentation and they therefore prefer to mail or fax the documentation in hard copy.
To address these issues, it would be advantageous to provide an application that not only manages tens of thousands of outreaches to suppliers, but that also can receive and perform an initial review of the responses.